EBay, bowing to Carl Icahn’s pressure, will split off PayPal

EBay, the world’s biggest online marketplace, said it would split off its payments arm PayPal, finally bowing to pressure from activist shareholder Carl Icahn after nine months.

EBay and PayPal will become independent companies in 2015, subject to customary conditions, the San Jose, California-based company said in a statement. Chief Executive Officer John Donahoe, who said in March a full separation was “not a good idea,” won’t have an executive management role in the businesses.

Donahoe sparred with Icahn for two months at the beginning of the year after the billionaire bought a stake in January, and the clash took an hostile tone until a settlement in April. A stand-alone marketplace business may become more attractive as an acquisition, which investors have been thinking about since Alibaba Group Holding Ltd. ‘s initial public offering, Piper Jaffray analysts said in a note. Meanwhile PayPal investors will contemplate the risk of direct competition from Apple Pay and Google Wallet, they said.

The company’s sum-of-the-part value may be worth about $62 a share, according to Piper Jaffray. The stock jumped 7.6 per cent to $56.65 before the markets opened today, for a market capitalization of about $70 billion.

EBay, whose online marketplace sells everything from motorcycles to golf clubs via auctions and at fixed prices, bought PayPal in 2002 to add online-payment services. The unit, whose sales almost tripled sales in the five years ended in 2012.